Like many other sectors, the insurance industry has become extremely competitive and overcrowded. Consequently, established companies are finding themselves competing with a growing number of new tech-savvy firms that are using disruptive and innovative strategies to capture market share.
These days, consumers often cannot differentiate between insurers and tend to make their decisions based only on price. Moreover, the rise in popularity of comparison tools enables consumers to quickly identify the insurance company that offers the best package at the lowest price. This drives several insurance companies to focus on the price.
What's more is that the insurance industry is highly regulated, and it is not easy to move quickly. Nevertheless, the consumers are moving at an exceptional pace. In fact, the pace of change is so fast that by the time a company has thought through things, the market might have already moved on.
So how do insurance firms encourage both customers and prospects to look beyond the price tag and stay competitive? Consumers want personalization and want to feel acknowledged by firms. Insurance providers that fail to adapt to upcoming trends run the risk of becoming complacent and losing out market share.
The way forward then is to provide tailored services to groups to improve the overall customer experience. This is where customer segmentation comes in.
What Is Insurance Customer Segmentation?
Customer segmentation involves dividing customers into groups that have common traits, goals, and needs. This way, businesses can provide tailored services and products to various segments. By developing specialied services and products, a business can cater to the needs of a large number of customers.
Understanding Insurance Market Segmentation
Currently, insurance products are extremely limited. Thus, customers are unable to purchase what they really want. For instance, due to the lack of available options, a teenager might have to purchase travel insurance that covers car rental or lost credit card. Similarly, a healthy young man might be forced into purchasing critical illness insurance that covers over 150 types of illnesses.
In such cases, segmentation could mean insurers underwrite various kinds of coverage and put them online for customers to select as per their requirements. This entails venturing into the world of digital insurance that enables customers to pick the products and coverage they truly need.
Reduce the cost of Insurance Customer Segmentation
The cost of making digital insurance is over $15,000, not including maintenance and any additional IT resources needed for the jobs. Such massive costs will prevent insurers from thinking about market segmentation altogether.
The good news is that Wesurance technology can significantly reduce costs through our subscription-based model. We provide a platform for insurance businesses to create an Insurance eCommerce for an End-to-end journey with zero IT assistance.
Wesurance is a UK-based Insurtech company that offers a platform for insurance companies and brokers to create and sell Insurance eCommerce. Build digital insurance without IT assistance using a drag-and-drop platform. Find out more here.